These Retirees May Want to Rethink Their Investing Strategies

From tariff flare-ups to inflation jitters and global uncertainty, recent market volatility has many retirees feeling uneasy. For some, the knee-jerk reaction is to retreat completely from stocks, shifting everything into the perceived safety of cash or bonds.

It’s an understandable instinct. However, some experts say it may not be the most sustainable strategy for the long haul.

This week, we’re exploring why some believe that steering entirely clear of stocks in retirement could actually raise long-term financial risks — and what considerations might help you navigate these choppy waters more confidently.

Is Longevity the Real Risk?

Many retirees focus on short-term market dips. But the biggest long-term challenge might be outliving their savings.

With average life expectancies climbing and more Americans living into their 90s or beyond, some retirement funds must now stretch 30 years or more. That means portfolios still need to grow — not just stay put.

While past performance is never a guarantee of future results, historically, stocks have outpaced bonds in terms of returns. Many advisors maintain long-term growth is critical when it comes to keeping up with inflation and funding decades of retirement spending.

Balance Over Extremes

It’s true that cash and bonds have an historical tendency to be less volatile, and de-risking your portfolio as you age by dialing back stock exposure can be a smart move. But pulling out entirely? That may limit the upside that retirement portfolios need to grow over time.

One traditional rule of thumb suggests subtracting your age from 110 or 120 to estimate a reasonable percentage of your portfolio that might remain in stocks. A 65-year-old, for instance, might start with a 50/50 split between stocks and bonds.

But of course, there’s no one-size-fits-all formula for your nest egg. Every individual’s needs, risk tolerance, and sources of income (like pensions or Social Security) play a role in shaping an appropriate investment mix. Experts suggest that the key is diversification across not just asset classes, but also time horizons.

🥒 Pickle Tip

Retirees don’t necessarily need to take an all-or-nothing approach to investing. One concept some investors explore is called “bucketing” — a strategy where different portions of a portfolio are set aside for different time horizons.

For example, cash or bonds might be earmarked for near-term expenses, while stocks are held with a longer timeline in mind, potentially giving them more time to recover from market dips.

🌟 Final Thought

Feeling uncertain about how your own retirement allocation stacks up? You’re not alone — and you're not stuck. If this topic hits close to home, it might be time to explore a second opinion.

If you ever feel stuck, explore Money Pickle’s network of financial advisors. They just might be able to help you navigate the market volatility on your own terms.

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